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How Does Obamacare Rob Medicare and Hurt Seniors?

The rhetorical Medicare wars have heated up this week, after President Obama declared in his Saturday radio address that his proposed reforms “won’t touch your guaranteed Medicare benefits. Not by a single dime.”

This is incorrect. Obamacare cuts $716 billion from Medicare over the next 10 years, according to the Congressional Budget Office (CBO), and uses these “savings” from Medicare to fund other entitlement expansions mandated by Obamacare. Medicare becomes a cash cow for Obamacare, and the Medicare “savings” from payment cuts are not put back into making Medicare solvent. Such massive payment cuts do impact Medicare benefits, as well as seniors’ access to those benefits.

Heritage’s Alyene Senger explains how this hurts America’s seniors:

The impact of these cuts will be detrimental to seniors’ access to care. The Medicare trustees 2012 report concludes that these lower Medicare payment rates will cause an estimated 15 percent of hospitals, skilled nursing facilities, and home health agencies to operate at a loss by 2019, 25 percent to operate at a loss in 2030, and 40 percent by 2050. Operating at a loss means these facilities are likely to cut back their services to Medicare patients or close their doors, making it more difficult for seniors to access these services.

The President also said on Saturday, “As President, my goal has been to strengthen these programs now, and preserve them for future generations.” But Obamacare imposes new taxes on present and future generations—including a hike in the Medicare “payroll tax” affecting upper-income earners that doesn’t even go toward Medicare. Senger details:

The payroll tax funds Medicare Part A, the trust fund that is projected to become insolvent as soon as 2024. Obamacare increases the tax from 2.9 percent to 3.8 percent, which is projected to cost taxpayers $318 billion from 2013 to 2022. However, for the very first time, Obamacare does not use the tax revenue from the increased Medicare payroll tax to pay for Medicare; the money is used to fund other parts of Obamacare, much like the $716 billion in cuts are.

The same set of dollars “saved” from Obamacare’s massive across-the-board Medicare payment cuts cannot be used to enhance Medicare solvency, reduce the federal deficit, and fund Obamacare’s entitlement expansions all at the same time. This is only a fraction of the dishonesty and budgeting shell games surrounding Medicare.

The Heritage Foundation advocates reforming Medicare into a premium support plan. What does that mean? Seniors would be given a choice between the fee-for-service Medicare of today or private plans. “Premium support” simply means that the government funding that goes toward their traditional Medicare plan now would be transferred directly to the plan of a senior’s choice, just as it is today in the Medicare drug program that already serves most senior citizens.

Not only would this change stimulate intense competition to control costs among private health plans, as well as the traditional Medicare program, but it would widen the scope of seniors’ options and give them greater control over their own health care.

Two important things to note:

Under all of the major premium-support proposals unveiled on Capitol Hill, traditional Medicare would remain. Seniors would have the right to stay in traditional Medicare or pick a better plan if they wished to do so. To quote President Obama, “If you like your plan, you can keep it”—truly.

Shifting to premium support would not take away seniors’ benefits. All major versions of premium support guarantee beneficiaries at least the Medicare benefits or the level of benefits they get today. In addition, they would have access to new plans with even higher levels of coverage at competitive prices tomorrow.

Some liberal opponents of Medicare reform pretend that reforms would suddenly bring private insurers into the mix. In fact, private health plans have been part of Medicare since the 1970s. The New York Times did a good job of explaining that private insurers are working very well within Medicare today—and they are playing a role in expanding benefit options while controlling costs. On August 25, the Times’s Robert Pear reported:

Even as President Obama accuses Mitt Romney and Representative Paul D. Ryan of trying to privatize and “voucherize” Medicare, his administration crows about the success of private health plans in delivering prescription drug benefits and other services to Medicare beneficiaries.

More than a quarter of the 50 million beneficiaries receive coverage through private Medicare Advantage plans, mostly health maintenance organizations, and Medicare’s drug benefits are delivered exclusively by private insurers, subsidized by the government.

Obama administration officials, lawmakers from both parties and beneficiaries have generally been satisfied with the private plans.

Medicare must be reformed. President Obama has a very different vision of what “reform” means. Join Heritage in debunking Medicare reform myths as this debate continues.

Saving the American Dream: Medicare

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